TDS Rates • For payment to residents and domestic companies, there will be no surcharge and cess on the basic rate of TDS. This simplifies TDS rates to a great extent. • There are changes in TDS rates for payments to contractors and payment of rent. Those are explained below. TDS on payment to contractors: Section 194C

The proposed amendment is effective from 01-10-2009.

Rate of deduction: Rate of deduction is now based on the status of payee and not on the basis of type of payment. Earlier the rate was 2% for payment to contractors and 1% for payment to sub-contractors and advertisement contracts. Now the rate is 1% for payments made to individuals and HUF and 2% in other cases.

Contractor manufacturing is now covered as “work” and is liable to TDS under this section.

This is defined as manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer, but does not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person, other than such customer.

If the invoice mentions value of material separately then such value will be excluded for calculation of TDS, in all other cases TDS will apply to total invoice value.

Persons carrying business of plying, hiring or leasing goods carriages.

Need not deduct TDS if contractor furnishes PAN.

Will have to furnish information as may be prescribed.

TDS on Rent: Section 194I The proposed amendment is effective from 01-10-2009.

Rent

Earlier

Now

Plant and Machinery

10

2%

Land building

15% for Individuals / HUF 10% and 20% for others

10%

eTDS Statement Filing: Section 200 • The proposed amendment is effective from 01-10-2009. Currently section 200 specifies quarterly filing of eTDS statements. • This is changed and now CBDT can specify the periodicity for which the statements are to be filed.

Processing of eTDS Statements: Section 200A The proposed amendment is effective from 01-04-2010. This new section introduces processing of eTDS Statements in the following manner.

• Sum deductible shall be calculated after making adjustment of arithmetical errors and apparent incorrect claims.

• Interest will be calculated.

• From the above actual amount paid will be deducted to arrive at TDS payable or refundable.

• Deductor will be informed about the TDS payable or refundable.

• Time limit for the processing is within one year of the financial year of filing of eTDS statement.

• CBDT will make a scheme of centralized processing of e-TDS Statements.

Time limit for Penalty proceedings: Section 201

The proposed amendment is effective from 01-04-2010.

A person is deemed to be an assesee in default for failure to deduct TDS in whole or part. • The order for such default now will have to be passed.

Within two years from the end of the financial year in which the eTDS statement is filed.

Within four years from the end of the financial year in which payment is made or credit is given, in any other case.

For financial year commencing on or before 01-04-2007, this time limit is upto 31st March 2011.

TDS Rate when PAN not available: Section 206AA

• The proposed amendment is effective from 01-04-2010.

• If deductee fails to furnish PAN to deductor, the deductor shall apply highest of the following rates for deducting TDS. (i) at the rate specified in the relevant provision of this Act; or (ii) at the rate or rates in force; or (iii) at the rate of 20%.

• Form 15G/ 15H declaration for no deduction of tax will become invalid if PAN is not mentioned therein.

• PAN will have to be mentioned in bills, vouchers and other documents communicated between deductor and deductee.

• If deductee furnishes invalid PAN or submits PAN belonging to someone else, it will amount to non furnishing of PAN.

Compensation on Compulsory Acquisition of immovable property >Rs.1,00,000 during the financial year

10

Surcharge

0

Education Cess

0

Note: If there is no PAN details, then from 1st April 2010 TDS will be deduted at the rate of 20%.

Form 27Q:

Section

Nature of Payment

Status

Tax (%)

194E

Payment to nonresident sportsmen or sports association

10

195(a)

Income from foreign exchange assets payable to an Indian citizen

20

195(b)

Income by way of long-term capital gain referred to in sec. 115E

10

195(c)

Income by way of Short-term capital gains u/s. 111A

15

195(d)

Income from other long-term capital gains

20

195(e)

Income by way of interest payable by Government/Indian concern on money borrowed or debt incurred by Government or Indian concern in foreign currency

20

195(f)

Royalty payable by Government or an Indian concern in pursuance of an agreement made by non-resident with the Government or the Indian concern after March 31, 1976, where such royalty is in consideration for the transfer of all or any rights (including the granting of a licence) in respect of copyright in any book on a subject referred to in the first proviso to section 115A(1A) to the Indian concern or in respect of computer software referred to in the second proviso to section 115(1A), to a person resident in India –

1.Where the agreement is made before June 1, 1997

30

2.Where the agreement is made after May 31, 1997 but before June 1, 2005

20

3.Where the agreement is made on or after June 1, 2005

10

195(g)

Royalty (not being royalty of the nature referred to in (e) sub para) payable by Government or an Indian concern in pursuance of an agreement made by non-resident with the Government or the Indian concern and where such agreement is with an Indian concern, the agreement is approved by the Central Government or where it relates to matter included in the industrial policy, the agreement is in accordance with that policy

1.Where the agreement is made after March 31, 1961 but before April 1, 1976

COMPANY

50

OTHERS

30

2.Where the agreement is made after March 31, 1976 but before June 1, 1997

30

3.Where the agreement is made after May 31, 1997 but before June 1, 1997

20

4.Where the agreement is made on or after June 1, 2005

10

195(h)

Fee for technical services payable by Government or an Indian concern in pursuance of an agreement made by non-resident with the Government or the Indian concern and where such agreement is with an Indian concern, the agreement is approved by the Central Government or where it relates to matter included in the industrial policy, the agreement is in accordance with the policy –

1.Where the agreement is made after February 29, 1964 but before April 1, 1976

COMPANY

50

OTHERS

30

2.Where the agreement is made after March 31, 1976 but before June 1, 1997

30

3.Where the agreement is made after May 31, 1997 but before June 1, 2005

20

4.Where the agreement is made on or after June 1, 2005

10

195(i)

Any other income

COMPANY

40

OTHERS

30

196A

Income in respect of Units of Non-residents

20

196B

Income and Long-term Capital gain from units of an Off shore fund

10

196C

Income and Long-term Capital Gain from Foreign Currency Bonds or shares of indian companies

10

196D

Income of Foreign Institutional Investors for Securities

20

Surcharge ( On Tax)

Applicable for Foreign Companies if payment/credit exceeds Rs.1 crore of such companies

2.5

Education Cess

on Tax deducted Plus Surcharge

3

Form 27EQ:

Collection Code

Nature of Purchase

Tax (%)

6CA

Alcoholic liquor for human consumption

1

6CB

Timber obtained under a forest lease

2.5

6CC

Timber obtained under any mode other than forest lease

2.5

6CD

Any other forest product not being timber or tendu leave

2.5

6CE

Scrap

1

6CF

Parking Lot

2

6CG

Toll plaza

2

6CH

Mining and quarrying

2

6CI

Tendu leaves

5

Surcharge
(On Tax)

Applicable for Foreign Companies if collections exceeds Rs.1 crore of such companies

I was finding TDS rate for insurance commission. I am a individual person. I want to calculate TDS on my commission. but dint get how to calculate, but from your site i got much more information about tax rate for current Assessment year. Thanks for creating such a informative site.

I am maintaining my books of accounts on cash basis but my client maintained its books of accounts on accrual basis & deduct TDS in F.Y. 2009-10 & provide the TDS certificate for the same in F.Y.2009-10 but I record my same income on cash basis in F.Y. 2010-11. So please confirm whether it is allowed to me in F.Y.2010-11.

We have issued order for hiring of car for a fixed period. The hire charges include (1) rental charges for the car, (2)running expenses on per KM basis and (3) wages of driver. Bills are payable on monthly basis. Pl. advice whether TDS is to be deducted u/s.194 C or u/s. 194 I of the Income Tax Act.

Dear Sir,
If (transporter)a unit of private limited com.provide the service of hiring of local sight seen in delhi,then what will be the tds rate for him. will he treated as individual or as other type. I mean the rate will apply 1% or 2% for him.

(a) I am working as a Professional Software Consultant in India from April 2010 and as per the co. offer I will get Rs 2 lacs pm. (b) I need to raise a Bill/Invoice to the Co every Month. (c) Should I need to add Tax in my Bill/Invoice. (d) What is the Tax Rate I should Add. (e) Should I need to deposit the tax I added in my Bill every Month or Qtrly. (f) When I should deposit the tax to Govt, i.e. after I get my payment ? (g) Company told they will deduct @ 10% on my monthly Bill/Invoice. (h) I am yet to get registered with Central Excise/Service Tax dept. (i) What are the Forms required to submit. Please advise me. Regards. NB Raju

We had given contract to local persone for shifting (Lebour charges & Transportation charges) our office. & he charged Rs.36K for the same & we paid him cash without deduct TDS. Is it ok as per income tax ACT? what amount should be paid in cash without deduct tDS?

I am working in a IMFL Manufacturing unit in accounts dept.While making slae of IFML we r charging TCS+S.Charge+Cess.Some one is telling with effect from 1st Sept’09 there is no S.Chargeand Cess.I asked my tax people they r telling it is effect from 1st Oct’09.I am greatful if u clarify at the earliest.

we are paying server rent to US vendor for providing space on server where at internet website is hosted/placed. Our CA says that Article 7 of US-India DTAA deals with “Business Profits” but we covered under Article 12 relating to “Royalty”.

Tell me about our TDS / Tax liability on the payment of server RENT to US vendor and other implications of Article 12.

we are paying server rent to US vendor for providing space on server where at internet website is hosted/placed. Our CA says that Article 7 of US-India DTAA deals with “Business Profits” but we covered under Article 12 relating to “Royalty”.

Tell me about our TDS / Tax liability on the payment of server RENT to US vendor and other implications of Article 12.

1. penalty of Rs. 5000 for not filing on time.
2. You will not be able to carry forward the losses for the same year if you have any.
3. Interest U/s. 234A if any tax liability is there.
4. Normally department do not accept return for any assessment year after one year from the end of Assessment year unless it issued a notice to Assessee instructing it to file a return for the same A.Y..

One assessee ” A ” engaged in transport business got transport contract from the principal ” B ” . ” A ” does not have any vehicle of its own; but engages hired vehicles from the market. If ” A ” submits his PAN to ” B ” i.e his principal, will ” B ” deduct TDS from ” A ” as per the new provisions. Please answer.

For B i.e. service receiver A is transport operator. He need not go in details to look whether the transport vehicles provided by A are owned by him or not. If A issuing transport bills to B then B can follow New TDS rule applicable from 01.10.2009.

Please confirm whether TDS/CESS/SURCHARGE need to be deducted OR NOT w.e.f. 01-OCT-2009 in case of interest amount on 8% Savings(Taxable) Bonds( issued by RBI) exceeding the limit of Rs.160000/- (for Male), Rs.190000/-(for Female) and Rs.240000/-(Sr.Citizen) or not. I think this comes u/s-193 of the I.T.Act.

Rajesh,
There is a new circular/notification wherein you need to get a certificate from CA before making payment to non resident assessees. Since there is nexus with India, Income Tax that prevails in India is applicable.Please check your DTAA (Double Taxation Avoidance Agreements) that prevails between India and US. If you dont deduct TDS the said expenses will be disallowed and there will attract penal provisions.

Certificate he will need to take but remittance will be without deducting any tax. In view of terms in Article 7 read with Article 5 of Convention For Avoidance of Double Taxation And Prevention of Fiscal Evasion with respect to Taxes on Income entered into between the Government of the Republic of India and the Government of the USA., on 12.04.1989 vide Notification No. GSR990 (E) Dated 20.12.90 and as corrected by Notification No. GSR342 (E) Dated 12.07.1991 TDS in not deductible No Tax is Deductible on the remittance to US company towards Charges For Bulk Purchase of Domain Name Registration, Server etc if the US company do not have permanent establishment in India.